Ability to change the name of your world save
Chain Armor
Pressure Plates can now be placed on fences
New mobs

Endermen

Cave spiders

Silverfish

New Food Items

Apples

Raw Chicken

Cooked Chicken

Raw Beef

Steak

Melons

Melon seeds

Rotten Flesh

Cobwebs
Fence Gate
Iron bars
Glass pane
Stone Brick
Stone Brick Stairs
Stone Brick Slabs
Brick Stairs
Brick Slabs
Pumpkin Seed
Vines
Pumpkins and Melons grow from stems much faster, and do not require farmland around the stem to grow on
Sponges(Creative only)
New biome
Swamp biome
Ocean biome
Ocean floor now consists of Clay, sand and dirt, this makes clay easier to find
Mountain biome
River
Rivers flow through/in between biomes
Passive mobs will randomly flee if attacked by the player or other mobs (such as Cows)
Pig has 3D snout.
Sugar Cane can now be placed on sand
Chest has opening and closing animation
User-placed leaf blocks no longer decay
Skeletons hold full size bow
Shears can now collect Tall Grass and Vines
Exclusive Superflat option for the Nether
Option to turn clouds off
Large changes to Xbox 360 tutorial mode
Bonus chest world option
Option to turn PVP off
Option to turn fire spread off
Option to make TNT not detonate
Option to trust players (to op players)

Bug fixes:
Fix for duplication glitch.
Fix for aspect ratio of things in hand when in splitscreen mode.
Fix for issue with player data not saving (player starting world with no items they had when they saved)
Fix for redstone tiles burning out when they shouldn’t.
Fixed issue with Minecart with Furnace not being able to move another Minecart.
Fixed particle code for flipped 3rd person view.